December 19, 2011 – Although currently in limited use, as-a-service enterprise resource planning deployments are expected to get far more attention and adoption in the coming years, particularly in industries such as logistics, according to a new report.

In Aberdeen Group’s report, “SaaS and Cloud ERP Trends, Observations and Performance 2011,” researcher Nick Castellina assessed survey responses from enterprises with ERP deployments. Adoption and interest in virtualized and as-a-service environments has increased greatly since Aberdeen’s 2007 look at as-a-service deployments for ERP, which was then viewed as the “last bastion” of resistance to virtualized environments.

On-premise is still the dominate deployment method for ERP (72 percent), though SaaS deployment has grown steadily during the last four years to an average of 9 percent, according to Aberdeen. That percentage is larger for organizations with less than $50 million in annual revenue; this group reports 17 percent of its ERP deployments via a SaaS model. But that percentage dips to 2 percent for large enterprises, though Aberdeen notes that bigger organizations turn more often to some form of the cloud as opposed to SaaS for this type of deployment.

At enterprises of all sizes, the willingness to consider SaaS for new or revamped ERP  implementations have more than doubled over the last two years, according to Aberdeen’s report. Fifty-two percent of enterprises of all sizes stated they would consider an as-a-service deployment of ERP, which is up from 23 percent in 2009. In a separate question, 65 percent of respondents were considering a traditional on-premise licensed ERP, which is 15 percentage points lower than that same consideration two years ago.

Castellina noted in the report that the lower cost point for SaaS is a big selling point for many enterprises, especially as as-a-service offerings become more sophisticated.

“In the past, some organizations thought that ERP was too critical to their business in order to consider a SaaS solution,” said Castellina. “Organizations are starting to realize that SaaS ERP solutions are offering comparable functionality to on-premise solutions.”

There remains a differing view among industry sectors of moving ERP information away from on-premise deployments, Aberdeen reported. The industries most willing to consider ERP in a SaaS deployment in the report were logistics (68 percent), nonprofits (67 percent) and the tech sector (58 percent). Least likely to consider as-a-service ERP were financial services companies (22 percent), health care (42 percent) and utilities (42 percent).

Concerns with moving ERP off-premise have dropped overall since 2009, especially with the desire to control the ERP upgrade process internally, which registered at 29 percent in 2011, down 16 percent from two years ago. However, 67 percent of respondents noted security concerns with ERP data off-premise, a jump of 17 percent from last year that Castellina blamed on increased attention to the cloud and a few big-scale breaches from the last year.

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